The CSR subsidies that President Trump keeps threatening to kill are pretty important:

Here in California, our insurance commissioner has asked all health insurers for two sets of rate hike requests: one that assumes the CSR subsidies continue and one that assumes they don't. We won't get the rate requests for several weeks, but I expect that we'll see the same kind of difference. At a guess, average rate increase requests will be around 6 percent with CSR and 15 percent without.

Just to be crystal clear about this: What this means is that if Republicans stop screwing around with CSR, rate hikes nationwide would probably be in the 5-10 percent range, which is fairly normal. It also shows that the market has started to stabilize after last year's big increases. The only reason we're likely to see another year of big increases is because of a deliberate campaign to undermine the Obamacare market by Republicans.

Greg Gianforte is running for the House seat in Montana left open when Ryan Zinke was named Secretary of the Interior. It turns out he really, really doesn't like being asked what he thinks of the CBO's score of the Republican health care bill:

For more on this bizarre incident, read Tim Murphy's story.

The long awaited CBO score of the new Republican health care bill is out! You're excited, aren't you? Without further ado, here's the CBO's key chart showing how much better new AHCA is than old AHCA:

As you can see, under old AHCA the number of poor with no insurance rose from 15-20 percent under Obamacare to 30-40 percent under AHCA. But under new AHCA, it's more like 29-39 percent. Hot diggity! Here are a few other numbers:

  • Old AHCA reduced the deficit by $150 billion (over ten years). New AHCA reduces the deficit by $119 billion.
  • Old AHCA took away insurance from 24 million people (by 2026). New AHCA takes it away from 23 million.
  • Old AHCA cut Medicaid by $839 billion (over ten years). New AHCA cuts Medicaid by $834 billion.
  • Under old AHCA, a low-income 64-year-old paid an annual premium of $14,600. Under new AHCA, the premium is $16,100. On the bright side, states that take advantage of new AHCA's permission to gut essential benefits can get that all the way down to $13,600. This compares to $1,700 under Obamacare.

Those are some mighty big changes, aren't they? You can certainly understand why the (former) head of the Republican "moderate" caucus worked so hard to revive AHCA and make these adjustments. It's like a whole new bill.

Lunchtime Photo

This is my neighborhood a little after sunrise. Marian loves this picture and insisted that I put it up. I took it several weeks ago, and I can't remember quite why I was up and about at such an ungodly hour.

You can't see our house, however. As I recall, the houses on the water cost about a third more than the houses that backed up to the main street, so we bought a house that backed up to the main street. This used to be something of a pain, because the dog people walked their dogs early in the morning right outside our bedroom window, and their dogs would all bark at each other when they passed by. For some reason that stopped a few years ago. Perhaps there was some big community meeting where the dog people and the late risers had it out once and for all. If so, I was blissfully unaware of the whole thing. Whatever the reason, it's pretty quiet these days except when the crows start squawking. I don't know what has them so upset lately, but they've sure been making a racket for the past couple of weeks.

From the LA Times today:

The median home price in Los Angeles County has reached the all-time high set in 2007, a milestone that follows five years of steady recovery but comes amid renewed concerns over housing affordability. Home prices rose nearly 6% in April from a year earlier, hitting the $550,000 level where the median plateaued in summer 2007 before a sharp decline that bottomed out in 2012.

....Orange County surpassed its pre-bust high last year, and in April set a new record of $675,000. San Diego County also exceeded its pre-bust peak for the first time last month, as the median price — the point at which half the homes sold for more and half for less — climbed 7.4% to $525,000.

Inflation has risen 20 percent since 2007, so this means home prices in Southern California haven't really set a record. They're still 20 percent away from that. Here's how CoreLogic scores the current housing market compared to its bubble peak:

So things look OK. Loan delinquencies are low, credit scores have remained high, and national housing prices are high but not stratospheric.

And yet...Southern California, Arizona, and Florida are all overvalued. That's three out of the four states that led the bubble in 2006. Even Texas, which avoided the last bubble, is looking high. And anecdotally, homes are selling pretty fast around here.

This is the kind of thing that makes me think we might be back into a recession by 2018. The expansion is nine years old, unemployment is about as low as it can get, housing prices are increasing at a good clip, auto sales are anemic, and corporate profits are rising steeply. On the other side of the ledger, economic growth and wage growth are pretty modest, and there are no signs of an oil price spike around the corner.

I dunno. Things just feel a little fragile right now. But maybe I'm off base.

A couple of days ago The Intercept released a leaked transcript of President Trump's recent phone call with President Duterte of the Philippines. Here's a piece of it:

BuzzFeed's Nancy Youssef got some feedback about this from folks in the Pentagon:

Pentagon officials are in shock after the release of a transcript between President Donald Trump and his Philippines counterpart reveals that the US military had moved two nuclear submarines towards North Korea. “We never talk about subs!” three officials told BuzzFeed News, referring to the military's belief that keeping submarines' movement stealth is key to their mission.

....By announcing the presence of nuclear submarines, the president, some Pentagon officials privately explained, gives away the element of surprise — an irony given his repeated declarations during the campaign that the US announces far too many of its military plans when it comes to combatting ISIS.

Moreover, some countries in the region, particularly China, seek to develop their anti-sub capability. Knowing that two US submarines are in the region could allow them to test their own military capabilities.

Needless to say, Trump wasn't expecting that his conversation would be leaked. But these things happen—along with other ways that private conversations can end up in the wrong hands—which is why presidents don't just casually drop military secrets into meetings with foreigners for no better reason than to make themselves look tough. This is now (at least) the second time Trump has done this, and there's a price to pay:

We're quickly reaching the point where intelligence agencies, both foreign and domestic, are going to start withholding information from Trump because they don't trust him to keep his yap shut. We might already be there, for all I know.

Mick Mulvaney says the haters don't know what they're talking about:

In his remarks Tuesday, Mulvaney mentioned that the economy had often grown in the past at rates of 3 percent and called people's objections to the Trump administration's expectation of growth rates that high "absurd."

"It used to be normal. Ten years ago, it was normal. In fact, it's been normal for the history of the country," said Mulvaney.

Mulvaney is sort of right about this. But there's more to it. The basic formula for economic growth is simple: Economic growth = Population growth + Productivity growth. Population growth has been slowing down for decades, and Mulvaney isn't going to change that. We know exactly what the population of the country is going to be over the next few years.

So that leaves productivity growth, which the BLS estimates here. Here's what all three factors have looked like since 1960:

In order to achieve 3 percent economic growth, we need productivity growth of about 2.3 percent. This is decidedly not normal for the history of the country—not in the past 50 years, anyway. With the brief exception of the unsustainable housing bubble era, we haven't hit that since the end of 60s.

Productivity growth is a real problem, and it's something of a mystery why it's been so low lately. But it's a mystery to Mulvaney too, and it's certainly not due to punitive tax rates or heavy-handed regulations. Despite this, Mulvaney is suggesting that Trump can more than double the productivity growth rate of the past ten years, reaching a target we haven't hit in a normal, healthy economy for the past half century. There's simply no reason to believe this, and Mulvaney hasn't even tried to explain how he thinks Trump can accomplish it. Not even hand waving. He's literally said nothing about productivity growth at all.

Until he does, nobody should believe his growth estimates. It all comes down to productivity, and that's what Mulvaney needs to talk about.

If you're wondering why the stock market is doing so well lately, here's the answer:

Earnings at U.S. companies grew at the fastest pace in nearly six years in the first quarter, the latest boon to a bull market that has stretched into its ninth year.

With nearly all companies in the S&P 500 having reported results, aggregate earnings for the first quarter are on track to grow 13.6% from the year-earlier period....Beyond the jump in growth, many investors have been encouraged by signs that the quality of the results is improving. That contrasts with recent years, when investors worried that corporate share buybacks and ultralow interest rates were juicing stock gains in the absence of business improvement.

It's not Trumpmania, it's just old-fashioned earnings growth. More people are buying stuff and companies are making more money. It's simple.

How long will this last? I don't know any more than anyone else, but my guess is that the current expansion has another year to go. I'm starting to see signs of an economy that's getting a little too exuberant, and I suspect that 2018 is going to be a mild recession year. Please note that this prediction is worth every cent you paid for it.

How much would a single-payer universal health care system cost in the United States? You don't need to do anything very complicated to get a ballpark figure. Here's the arithmetic:

  • Total spending on health care in the US is $3.2 trillion
  • Of that, $1.5 trillion is already funded by federal and state programs. That leaves additional required spending of $1.7 trillion.
  • A universal system will still require some copays and other out-of pocket expenses. Figure $200 billion or so. That leaves $1.5 trillion

So that's it. A universal health care system in the US would require about $1.5 trillion in additional government spending. If you want to make heroic assumptions about how much a single-payer would save, go ahead. But nobody serious is going to buy it. If we're lucky, a good single-payer system would slow the growth of health care costs over the long term, but it's vanishingly unlikely to actually cut current costs.

There was a lot of surprise today about an estimate that a single-payer plan for California would have a net additional cost of about $200 billion. But California has 12 percent of the nation's population, and 12 percent of $1.5 trillion is $180 billion. So that estimate is right in the ballpark of what you should expect. Short of some kind of legislative miracle, there's really no way around this. Health care is expensive.